Orbitz is not out of the woods, by any means. It still has a huge amount of debt and its ongoing challenge is to convert its rhetoric about growing its hotel business into concrete gains.

But, Orbitz indeed is a company in transition.

And, just as Orbitz seems to be handling its loss of booking-fee revenue, the online travel companies (OTCs) one day may be forced to cope with a hotel merchant model that is just too much of a hassle to retain because of the tax issue.

But, we would be wrong to think that adverse court rulings on the hotel tax question would spell the demise of the OTCs.

They are not static creatures and they have the capacity to adapt.

New business models for selling hotel rooms are possible and indeed are emerging.

1 comment:

Love the blog - great stuff. Orbitz is the first OTA I can think of to focus on the cost side of the business (and REALLY focus on the cost side of their business). Just looking at the revenue side, they're a basket case - no service fees, a less-than-underwhelming hotel product, dying demand, etc...but (like the airlines, oddly enough), they broke from the pack by focusing on costs. Sure, it remains to be seen whether that can sustain them long enough. But most of us like the travel industry because the marketing piece is fun - but the profits for the next year are going to come (at least in large part) by managing costs. You have to eat your spinach to get your dessert, I guess.

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I've followed online travel, its twists, turns and detours, since the beginning (not Adam and Eve, but Rich and Terry), and will follow the aforesaid in this blog. I'm North America editor of Tnooz and I write USA Today's Digital Traveler column. Things not in my resume: I visited Orbitz headquarters pre-launch in 2000 and, left unattended, eavesdropped and examined the whiteboards to learn partnership details; Travelocity's ex-CEO Michelle Peluso credits me with her success (Wharton notwithstanding) after I wrote a sentence (with accompanying photo) mentioning that some of her Site59 women wore fishnet stockings and then airline execs kept the phone lines busy; I once drove to tiny Sherman, Conn., to see where PhoCusWright lives; and I was a nachtportier in a West Berlin hotel in the days (Btw) when a nasty wall split the city. Fyi, the previous stuff wasn't necessarily in chronological order.

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The opinions I express in the Dennis Schaal Blog are my own. Only I could think of this stuff. The opinions uttered or written here in no way reflect on the views of past employers, current partners, future associations (how could they anyway?) or my first-grade teacher, Mrs. Slayton. I don't have a lawyer, but if I had one, he or she probably would have told me to write something like this. Well, maybe not exactly. The Dennis Schaal Blog is Copyright (c) 2009 by Dennis Schaal. All rights reserved.